Contact: John Hartgen
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BREAKUP FEES SHOULD BE ALLOWED ONLY IF THEY ENCOURAGE A STALKING-HORSE BIDDER TO ENTER INTO A TRANSACTION OR ADHERE TO ITS BID, ACCORDING TO LATEST ABI QUICK POLL

September 20, 2010, Alexandria, Va. - Eighty percent of respondents to ABI's latest Quick Poll agreed that breakup fees should be allowed only if they are necessary to induce a stalking-horse bidder either to enter into a transaction or to adhere to its bid after the court orders an auction. Forty-one percent “agreed strongly” and 39 percent “somewhat agreed” that breakup fees should only be allowed to hold a stalking-horse bidder responsible for its bid or to entice bidders to enter into a transaction.

Earlier this year in the case of In re Reliant Energy Channelview LP, 09-2074, the U.S. Appeals Court for the Third Circuit affirmed a bankruptcy court's denial of a bidder's request for the disbursement of administrative expenses in the form of a break-up fee from the estate. The appeals court said that the bankruptcy court did not abuse its discretion when it concluded that an award of a break-up fee was not necessary to preserve the value of the estate.

Only 11 percent of respondents disagreed that breakup fees should only be allowed if they are necessary to encourage a stalking-horse bidder either to enter into a transaction or to adhere to its bid after the court orders an auction. Nine percent “disagreed somewhat” and two percent “strongly disagreed” on the issue. Five percent did not know or had no opinion on the issue.

ABI members and members of the public were welcome to submit their response to the statement: “Breakup fees are allowed only if they are necessary to induce a stalking-horse bidder either to enter into a transaction or to adhere to its bid after the court orders an auction. In re Reliant Energy Channelview, 594 F.3d 200.”

ABI's Quick Poll is posted on ABI's home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 12,600 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html